Two Big Financial Flaws In The Health Care Bill
You’d think that at this point all conversations about the health care bill would be over. Seems that the discussions are just beginning, and there are two big issues that suddenly are garnering a lot of attention.
The first is the new requirement that kicks in come 2012. It requires any business or person that pays more than $600 in services or supplies to fill out 1099s and report it to the government, as well as making sure to send them to those who provided the services. Not only is this going to create a lot of paperwork for everyone involved, but it’s going to ruin things for people like me, a consultant who does a lot of things for a lot of people for different rates. Suddenly someone paying me $100 a month for a small service is supposed to create a 1099 for me, even if they’re not a traditional business.
But it’s going to impact someone like me in another way as well. Here’s what was reported as an example:
“Under the new rules, if a freelance designer buys a new iMac from the Apple Store, they’ll have to send Apple a 1099. A laundromat that buys soap each week from a local distributor will have to send the supplier a 1099 at the end of the year tallying up their purchases.”
This is where it’s going to get ridiculous. Any capital purchases I make for my business I’m now supposed to send them a 1099. My biggest purchases are computers here and there, but there’s always the possibility that manuals I use for business could get close to that amount, and that’s scary. I’m wondering if this also means that, since Staples is my office store of choice, that if I reach $600 in purchases from them in a year that I need to send them a 1099; can you imagine?
The reason for this is so the federal government can verify that it’s getting all the dollars it’s supposed to be getting for health care. A Democratic aide for the Senate Finance Committee defended the move saying “Information reporting improves tax compliance without raising taxes on small businesses. Health care reform includes more than $35 billion in tax cuts for small businesses… indicating that during these tough economic times, Congress is delivering the tax breaks small businesses need to thrive.”
Okay, that’s the first issue. Here’s the second. It seems that some large corporations have been taking a look at this bill and actually trying to determine if it would be more cost effective to stop providing health care for all of their employees and just pay the penalties instead. Some have found that, indeed, it would save them money up front, yet they haven’t pulled the trigger on it. Four companies records were subpoenaed, AT&T, Verizon, Caterpillar and Deere, and the figures were so shocking that it was decided not to hold an open hearing on it, for whatever reason.
It’s a scary proposition across the board because the health care bill is depending upon large employers to continue covering employees, and probably never really considered that companies might find it more beneficial financially to just pay the fines. It’s estimated that if 50% of the companies decided to follow through with it that it could cost the federal government at least $160 billion a year more. Of course, many large companies have unions to contend with, so part of this could be a moot point, except that not everyone is in the union.
Two more reasons why I say the health care bill needs to be overhauled.